Merkel with Tusk in prison for the rest of their natural life

Merkel’s fear was that Athens would be unable to overcome its problems even with an additional haircut, since it would not be able to handle the remaining debt.

In other words Merkel knew at the time of the original bailout that the terms were not sustainable. That is, Greece, even with the original haircut that was put in the debt and the bailout loans they would not be able to pay.

But she pushed for it anyway and to this day has not admitted this.

What is knowingly handing someone a noose, claiming that it’s a rope to climb out of a hole with? What is it when the leader of a nation does that intentionally to the people of another nation?

Coming on top of the very high existing debt, these new financing needs render the debt dynamics unsustainable. This conclusion holds whether one examines the stock of debt under the November 2012 framework or switches the focus to debt servicing or gross financing needs. To ensure that debt is sustainable with high probability, Greek policies will need to come back on track but also, at a minimum, the maturities of existing European loans will need to be extended significantly while new European financing to meet financing needs over the coming years will need to be provided on similar concessional terms. But if the package of reforms under consideration is weakened further—in particular, through a further lowering of primary surplus targets and even weaker structural reforms—haircuts on debt will become necessary

In other words the existing « bailout terms » will not suffice.

Further, this was known in 2014 to be under extremely high risk and the proceeds from privatization efforts, much of which were supposed to come from state holdings in the banking sector, have been derailed due to non-performing loans — loans that were on the books before the bailout and thus, had they been examined with any sort of dispassionate analysis…. (in other words this was known to be true as well and intentionally ignored.)

What’s worse is that even if there is a « third » program of concessionary loans extreme vulnerability to shocks (say, a recession?) will remain.

Assuming official (concessional) financing through end–2018, the debt-to-GDP ratio is projected at about 150 percent in 2020, and close to 140 percent in 2022 (see Figure 4ii). Using the thresholds agreed in November 2012, a haircut that yields a reduction in debt of over 30 percent of GDP would be required to meet the November 2012 debt targets. With debt remaining very high, any further deterioration in growth rates or in the mediumterm primary surplus relative to the revised baseline scenario discussed here would result in significant increases in debt and gross financing needs (see robustness tests in the next section below). This points to the high vulnerability of the debt dynamics.

To be blunt: About €100 billion of the 300 outstanding has to be flushed down the drain.

Guess what? That’s a problem because the ECB has most of it at this point and less than a tenth of that in actual capital, which means that doing so would require direct payments for recapitalization purposes from the remaining EU members to the ECB!

Ouch.

Now take all this together and tell me why the Greeks should vote to continue under the present program. There is utterly no upside for them to do so; the present program that is in place cannot succeed according to the analysis, which means that a YES vote is a vote for economic suicide with certainty.

This does not mean that a « NO » vote guarantees success, but voting for something certain to fail, overseen by someone who appears to have known it would fail four years ago, is asinine.